Compensation for Harvard's team of investors atHMC is often sharply criticized by those who thinkthat a not-for-profit corporation should not bepaying seven-digit salaries--no matter what theline of work.

In previous interviews, Meyer has defendedJacobson's salaries, maintaining that the investorwould make much more money working for an outsidefirm.

Harvard officials maintain that the Universitysaves money by not using independent investmentcompanies, the strategy used by most othercolleges and universities.

Currently only 16 percent of Harvard'sendowment is managed externally, according to a1996 report by the National Association of Collegeand University Business Officers (NACUBO).

Highfields Capital will manage roughly 5percent of Harvard endowment, making it one of thesingle largest outside managers of Harvard'sfunds, if not the largest, according to data fromthe NACUBO report.

"[Harvard] always said they were never going todo hedge funds with side investors because theydidn't want to give up profits," Gordon said. "Itraises the specter that they realize that whatthey've been doing in the past isn't as successfulas it could have been."

Jacobson will be replaced by Craig Szeman, afellow money manager at HMC. Szeman has notpreviously been among HMC's five highest paidexecutives.

"We have a lot of confidence in [Szeman]. He'sbeen working very closely with [Jacobson] for thepast four or five years. We think he will do verywell," Meyer said